Integrate Sustainability and Innovation to Find New Opportunities

Five common innovation practices can help leaders pursue sustainability as a growth strategy.

- By Ivanka Visnjic, Felipe Monteiro, Michael Tushman, and Ernesto Ciorra

A SUSTAINABILITY-FOCUSED BUSIness strategy often requires solutions that do not yet exist.

The ambitious bets that companies make on the future, such as decarbonizing their operations, can seem out of reach and require innovation to make tangible progress.

Yet, sustainability-driven innovators face two interconnected challenges. First, innovation and product development teams are increasingly required to incorporate sustainability criteria without compromising product performance, particularly in terms of cost and quality. Second, many sustainability objectives involve complex changes to a company’s value chain — and to society as a whole — demanding solutions that extend beyond a single company’s immediate control.

As a result, leaders may struggle to connect their sustainability goals with the transformative changes needed to achieve them. To learn how others have done this, we studied a dozen companies in a range of industries that have ambitious sustainability objectives and have made them the driving force for innovation in their products and operations.

These companies start with practices that will be familiar to innovation leaders. First, they reframe sustainability as a source of strategic growth rather than a compliance problem. Then they collaborate to develop new products and processes with lead customers and trusted partners who share their commitment to sustainability.

However, achieving their aspirations requires more than the efforts of innovation and product teams, so these companies have changed how they plan, invest, and compete. They involve business functions such as finance in creating a long-term strategic vision for sustainability. Further, they engage additional stakeholders — including competitors, universities, startups, and regulators — in collectively transforming their industries.

Balancing Sustainability With Traditional Performance Metrics